Consulting Links

Dallas Regional Chamber hired BCG to conduct a survey of the region. The fact that they’re willing to hire a consultant signals to me that they probably have good government and don’t need consultants as much as the places that aren’t hiring consultants. In short, consider a move to Dallas.

Two Bain executives wrote an op-ed in Forbes Magazine about how health insurance companies can cut costs. They studied large companies to find out how the companies managed health care costs and then cherry-picked the best practices of those firms.

Their main recommendations are that insurance companies should try to motivate employees to stay healthy. Healthy employees have lower healthcare costs (and, according to Eric Barker, get fired less often). For example, they could charge higher premiums to smokers or award prizes for healthy behavior.

They also recommend that insurers motivate sick patients to take treatments that will make them get better. Sometimes chronically ill patients don’t take their medications or follow through with recommended treatment, which delays recovery and increases insurer costs.

A third recommendation is to design healthcare systems so recommendations and decisions about care come from a patient’s primary doctor. When the recommendations are made in this fashion, rather than through an anonymous far-away bureaucrat, patients are much more likely to be agreeable.

I’m not sure that insurers will be able to follow through with these recommendations. People who get their health insurance from their company may respond more to motivation because they affiliate with the company, and the health insurance costs of the firm are pooled amongst other employees. With health insurance in general, affiliation is much weaker (Americans or Californians instead of Target employees), and people probably won’t feel any social pressure to change their behavior. Furthermore the regulatory or political climate for insurers might be more restrictive than that for firms, but I’m not an expert.

Here’s a recent piece from McKinsey on some problems with IT product design. Software is showing up in new products, for example, cars, as features and knowlege about the benefits diffuse slowly throughout the economy. However the recommendations in this report are mainly things that Silicon Valley design types have been saying for years: don’t jam your product full of features, make the code reusable, create product interfaces that are user-friendly, etc.

This reminds me of a piece I read yesterday by Scott Berkun about how the main challenge facing IT and user-experience (UX) professionals is convincing other people in their organizations of the importance of good design, and budgeting for product design. IT people often were brought up in a different culture and don’t do a good job of selling themselves or pitching the need to the management people. Management often likes intervening as a way of reinforcing their control of a design; the problem is that management doesn’t know much about usability or IT and can harm the project, or budget too little money to do a good job.

So that article can be useful by explaining the principles of user experience and product design to management types, and explaining why it’s valuable.

This Bain “capability brief” explains some basic principles of human resources, and how to cut down on bloat in your organization structure. They discuss reducing a firm’s “layers” and increasing its “spans” – “spans” are the number of people reporting directly to you, and the layers are the number of boss levels. The best firms have fewer layers and more direct reports than the worst. Fewer layers helps decision making, effectiveness, saves money, but is really difficult to achieve.

They go on to explain how to cut organizational bloat; it’s difficult but can be done. First, map the firm to figure out where you have excesses and duplication of work. Then set a target, like 7 layers of management or increase everyone’s direct reports by 2. Finally be really careful to avoid employee shifting and management excuses to avoid cuts (Get it Done), and implement automatic checks to avoid the process repeating itself. Everyone needs to be on board for a restructuring, because it is painful and there will be a status quo bias.